Will Stadia Change the Gaming Landscape Beyond Recognition?

Google made a hard-hitting announcement on March 19th at the GDC in San Francisco, placing it as a direct competitor to rivals Microsoft, Sony and Steam all at once, announcing the imminent launch of their ‘Stadia’ gaming platform. Rollout will occur later this year and Stadia will initially be available in Europe and North America. Stadia will be based entirely in the cloud, with Google aiming to make their system accessible to as wide an audience as possible, providing a high-end console and PC gaming solution at an affordable price, negating the hardware purchase barrier of entry.

In his section of the keynote at GDC, Ryan Wyatt (Head of Gaming at Google) made a point of addressing the 200 million plus gaming fans who watch gaming content on its streaming platform, YouTube. With the ability to click into in-game footage on YouTube and within seconds be playing the game yourself, the aim is to provide a seamless transition from viewing to taking part. Another feature is an inbuilt button on the controller, allowing gamers to stream directly to YouTube. The implication of this is that Google are vertically integrating the entire modern gaming process of watching a user’s favourite streamers, playing the game and uploading your own content, all of which can be done within seconds. This lack of friction was one of the main selling points that Google leaned on during its keynote address.

Stadia will allow users to easily access gaming content on a wide variety of screens, including TV, desktop, laptop and even selected phones and tablets (demonstrated at GDC on a Google Pixel). An emphasis was placed on the fact that the laptop and mobile used in the demonstration would be incapable of supporting such gameplay to such a high standard on traditional systems. The controller also comes integrated with Google Assistant extending Google’s reach within the competitive smart home environment.

The platform will take advantage of Google’s data centre cloud network, offering a user access to a 10.7 TFLOP graphics processor, power that dwarfs Xbox as the current ‘most powerful’ title holder, at 6.17 TFLOPS. What this means is that under the right conditions, players will be able to stream content in 4K 60 FPS quality. However, this will only be possible when connected to a high-speed internet connection, a major limiting factor for Stadia’s core offering of cloud-based gaming. Nevertheless, with the arrival of 5G infrastructure on the horizon and roll out of Wifi-6 in homes in late 2019 perhaps we will see an environment in the future where users can at play anywhere and anytime.

With the capability of cloud-based processing, Google have avoided limiting themselves to the hardware constraints suffered by traditional gaming systems. The implication is that when the accompanying tech can support 8K and faster frame rates (up to 120 FPS), Stadia will evolve to support these specifications. Without the need for downloading content, the system allows seamless transition between devices, as demonstrated by Google VP Phil Harrison during the keynote, who transferred his play of Assassins Creed Odyssey from a Chromebook to a mobile handset almost instantly.

The payment model and pricing of Stadia is yet to be announced, therefore it is difficult to fully assess the impact Google’s new solution will have on the current gaming market. What is clear is that Google have set their sights on the console and PC gaming market, thanks to the proposed 10.7 teraflops of processing power the system will offer. This far outweighs the technical requirements of typical mobile games and providing a platform that will allow access to AAA titles remotely and even expand the power available for developers and the average consumer to game on.

One suggestion is that Google will push a subscription model for access to Stadia games. Consumers are drawn to subscription models thanks to the savings that can be gained from access to significant libraries of content. However, Futuresource has questioned whether a subscription model for gaming would work. Futuresource’s media tracking services have shown that whilst consumer savings are relatively high for VoD and music, for gaming the margin is low. Furthermore, the gaming market has been affected to a lesser extent by piracy than the music and video markets, meaning that publishers are less motivated to try new business models, versus traditional game sales. There is less incentive for a user to buy into a subscription gaming model versus purchasing a game outright, and moreover, games publishers will be reluctant to trial subscription services which will limit the scope for lucrative DLC sales. While Google are pivoting towards generating a hardware business, and revenues may be sought through the Stadia gamepad, advertising revenue remains the powerhouse of the company, so there remains the possibility that Stadia may be ad funded. However, questions remain on how adverts would be delivered whilst gaming.

Whilst Stadia is a significant and exciting announcement for Google, the company may lack access to one of the most lucrative gaming markets worldwide, China. With international relations between America and China remaining difficult, it seems unlikely that access to Google services will be allowed in China any time soon. Google is also facing issues in Europe, following a €1.5 billion fine for advertising policy misconduct, placing further question marks over Google’s head.

Despite excitement over the potential avenues for development in the gaming industry, Futuresource’s forecasts remain confident that 29 million consoles will ship this year, growing to 34 million in 2020.

Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.